Tax Committees Debate Highway Funding as Money is Running Out
March 06, 2014
Photo: Evan Lockridge
Ideas for infusions into the Highway Trust Fund got conflicting receptions before congressional tax committees this week.
At a hearing Wednesday on the Obama administration’s 2015 budget, Sen. Ron Wyden, D-Ore., chair of the Senate Finance Committee, said he is looking for bipartisan ideas to keep the fund solvent.
“You can’t have big-league economic growth without big-league infrastructure,” Wyden said.
The Finance Committee, which has responsibility for funding the federal highway program, is looking at ways to attract private-sector capital to infrastructure investment, he said.
“And America will soon need a solution to keep the Highway Trust Fund solvent. We are going to go prospecting, colleagues, for bipartisan ideas in both areas.”
Treasury Secretary Jack Lew said that Democrats and Republicans have similar ideas on one possible solution: putting the payoff from corporate tax reform into the Fund.
The administration in its budget is proposing to use $150 billion generated from a lower corporate rate to resuscitate the fund, which is likely to run into the red by late summer.
“There are one-time savings in lowering the rate,” Lew said. “You can use the money to reduce the deficit or spend it on infrastructure. There are proposals on both sides that have elements of agreement. The more we talk about it across party lines the more opportunity we have to get something done.”
Talk continued Thursday at a hearing on the budget before the House Ways and Means Committee, but the tone from Rep. Dave Camp, R-Mich., chairman of the panel, was decidedly less receptive.
The administration holds that its proposal is revenue neutral, but in Camp’s view it is actually a $150 billion tax increase.
“The budget is really proposing a $150 billion business tax increase in the first decade, and then the proposal would be revenue neutral in the years 11 and beyond,” he said.
Lew replied that if the savings go into permanent rate changes the government will lose money over time. “You have to step down rates … in order to be truly revenue neutral,” he said.
Camp has a plan to comprehensively reform the tax code that would dedicate $126.5 billion over eight years to the Trust Fund, taking the money from a change in the tax treatment of foreign income to U.S. corporations.
As tax legislators debate this issue, the House Transportation and Infrastructure Committee is working on details of the next highway bill, due by the end of September.
Industry witnesses at a hearing on freight policy said that the best thing Congress can do is pass a well-funded long-term highway program.
But there are other things that can be done as well.
FedEx and other carriers want the next bill to include a provision allowing states to increase twin-trailer lengths from 28 feet to 33 feet, said Henry Maier, president and CEO of FedEx Ground.
“The use of 33-foot twin trailers would provide a carrier the potential, on any given lane, to absorb up to 18% of future growth, without traveling any additional miles or worsening wear and tear on our roadways,” Maier said
“Industry-wide, that equals up to 1.8 billion fewer miles driven, more than 300 million gallons of gasoline saved and $2.6 billion in reduced costs annually,” he said.
He added that FedEx’s experience in Florida with 33-foot trailers shows that the equipment is safe. Since 2010 the company has logged 500,000 miles with no accidents. The trailers do not weigh any more but drivers say they track better and are more stable than the shorter ones, he said.
Support for these vehicles also came from Susan Alt, senior vice president for public affairs at Volvo Group North America.
Twin 33s are a great way to move more freight with less fuel, she said. And truck safety technology has come a long way since the size restrictions were locked in some 25 years ago. “Today’s trucks are safer,” she said.
Sizes and weights will be a hot issue in the bill, as Edward Wytkind, president of the Transportation Trades Department of the AFL-CIO made clear in a later discussion when he said the union opposes the longer trailers.
The issue will not be resolved until the Federal Highway Administration is Department of Transportation completes a comprehensive analysis that Congress will use to inform its decision. The report is due next fall.
On another point, Alt noted that the price of a new truck has gone up $25,000 over the past decade, largely due to emissions control requirements. As that price has gone up, so has the Federal Excise Tax truck buyers must pay, she said.
The FET revenues flow to the Highway Trust Fund but the industry and country would be better served by collecting that money through a higher fuel tax, Alt said.
If the FET were reduced or eliminated, it would promote more sales of cleaner, safer and more efficient trucks, she said.